PE secondaries funds reach best Q1-Q3 period ever

Secondaries funds that invest in private equity opportunities have raised more capital so far this year than any other similar period to-date, Secondaries Investor data shows.

Vehicles that held their final close between January and the end of September raised $67.69 billion, a 168 percent jump on the same period last year. The figure is 46 percent more than the previous record of $46.44 billion raised in Q1-Q3 2020.

Vehicles managed by Blackstone Strategic Partners and Goldman Sachs Asset Management bolstered this year’s fundraising jump.

Overall, secondaries made up 12 percent of total private equity fundraising in the first three quarters of this year, affiliate title Private Equity International reported on Monday. Private equity fundraising for vehicles that held final close between January and end-September reached $561.3 billion.

There is between $170 billion and $220 billion in dry powder for secondaries strategies, according to separate estimates by Jefferies and PJT Partners. Despite this, some market participants believe the secondaries market is undercapitalised.

“We’re not actually gaining dry powder,” said one buyside veteran, speaking at an event in New York this month held under Chatham House rules. Over the last three years, firms have raised a fraction of the total capital deployed in secondaries transactions over that period, the veteran added.

Blackstone’s $22.2 billion Strategic Partners Fund IX represents a significant amount of the capital raised in the first three quarters of the year. The vehicle was the third-largest fundraise during the period across all PE strategies. Its GP-led-focused Strategic Partners GP Solutions fund, which closed on $2.7 billion concurrently, is the sixth largest private equity secondaries fund raised across the period. Both vehicles accounted for around 37 percent of private equity secondaries fundraising capital raised for vehicles that closed in the first nine months of the year.

Goldman Sachs Vintage Fund IX, which closed in September, was the second-largest secondaries vehicle raised bringing in $14.2 billion. It was the eighth-largest private equity fund raised overall. Glendower Capital Secondary Opportunities Fund V took the third spot for secondaries, reaching $5.8 billion in July.

Other large secondaries raises are underway. Ardian, for example, recently held a close on or around $20 billion for ASF IX, affiliate title Buyouts reported. Lexington Capital Partners X has also reached $18.29 billion ahead of its $15 billion target, according to Secondaries Investor data.